BARCLAYS yesterday signalled the worst was over by announcing plans to reinstate dividend payments as it chalked up profits of £4.5billion for the nine months to September.

Chief executive John Varley has seen Barclays chalk up profits of £4.5bn

However, investors were dismayed the interim payout was only a token 1p a share and some aspects of the bank’s performance disappointed, even though finance director Chris Lucas said bad debts would peak late this year or early next year. The shares tumbled 17½p to 325¼p.

Lucas said the group had restarted dividends to meet a commitment made when the bank scrapped the payout at the height of the financial crisis. He said the bank had yet to finalise the ratios used to decide future payouts but warned they would be much lower than in the past. “I want to make it very clear we want to be prudent in terms of ratio,” he said. “The proportion of profits after tax distributed through dividends will be significantly lower than in previous years.”

Barclays, headed by John Varley, saw pre-tax profits fall 19 per cent to £4.5billion. However, stripping out one-off impacts, underlying profits nearly doubled to £4.4billion. Lucas said the bank now expected bad debt charges for the year to be at the lower end of the £9billion to £9.6billion range. Profits at investment banking arm Barclays Capital fell 38 per cent to £1.4billion but income nearly doubled to £14.2billion, fuelling talk of bumper bonuses.

Lucas said the bank would comply with regulatory guidelines on pay and would consider “all stakeholders”, including the “broader community” before setting bonuses next year. Barclays Capital’s chief operating officer Rich Ricci said: “We are looking at salaries although we haven’t done anything yet.” He added that the market for talent was “intense”.

Profits in the high-street banking arm fell from £3.1billion to £2.1billion as profits in the UK “decreased significantly”. The division’s boss Frits Seegers is leaving as Barclays hives off commercial banking to the investment bank, run by president Bob Diamond.

Lucas added he believed the group would have enough capital to run the company and meet regulatory requirements once asset management arm BGI is sold next month. Proceeds from the sale will also ensure Barclays will make record profits for this year.

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